Welcome to today’s Shift4 Payments Second Quarter 2021 Earnings Call. My name is Jordan, and I will be coordinating your call today. I’m now going to hand over to Sloan Bohlen to begin. Sloan, please go ahead.

Thank you. I'd like to welcome everyone to Shift4's earnings conference call for the three months ended June 30, 2021. Before we begin, I'd like to remind everyone that this call will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements, including statements regarding management's plans, strategies, goals, and objectives; the expected impact of COVID-19 on our business and industry; including with respect to the economic recovery, increases in vaccination rates, the reopening of the country, and any volume recovery by us; gateway penetration and spend seen by our gateway merchants; expectations regarding new customers, acquisitions, or other transactions; and anticipated financial performance including our financial outlook for the year ended December 31, 2021. These statements are neither promises nor guarantees but involve known and unknown risks, uncertainties, and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Factors discussed in the Risk Factors section of our annual report on Form 10-K for the year ended December 31, 2020, as updated by our quarterly report on Form 10-Q for the six months ended June 30, 2021 and our other filings with the Securities and Exchange Commission, could cause actual results to differ materially from those indicated by the forward-looking statements made on this call. Any such forward-looking statements represent management's estimates as of the date of this call. While we might elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change. In addition, we may also reference certain non-GAAP measures on this call, which are reconciled to the nearest GAAP measure in the company's earnings release, which can be found on our Investor Relations website at investors.shift4.com. And with that, let me turn the call to our Chief Executive Officer, Jared Isaacman.

Thank you, Sloan. Good morning, and thank you all for joining us. As you saw in our pre-announcement a few weeks back, we achieved reasonably strong results for the quarter, setting new records for end-to-end processing volume, gross revenue less network fees, and adjusted EBITDA. Specifically, we reported end-to-end volume of $11.8 billion. To put it into perspective, that is nearly three times the same period last year, and is more than double the same period in 2019. Similarly, we grew gross revenue less network fees to $136 million, or 81% compared to the same period in 2019. Gross revenue less network fee growth in the second quarter was up 40% compared to just a quarter ago. As was the case last quarter, the majority of our growth was the result of new and larger merchants joining our platform over the last 12 months. Volume growth also improved as expected, as the country continues to reopen. Consistent with our volume growth, we are driving a higher mix of our revenues from net processing fees, as more and more of our gateway customers migrate to our end-to-end solution, which represents significant accretion to our profitability. Overall, when we look at our topline growth, the second quarter is a great example of the multiple ways Shift4 can grow, and our model has inherent operating leverage, evidenced this quarter by the improvement in our adjusted EBITDA margins. Second quarter adjusted EBITDA margins came in at 33%. We're driving margin improvement while simultaneously making investments supporting our expansion into new verticals, including the introduction of many new digital capabilities. It's also worth reiterating that several of our acquisitions were EBITDA neutral to negative, but are expected to contribute meaningfully as we execute on our integrated payment strategy and unlock revenue synergies. To put it more plainly, we believe there is embedded margin uplift as our new vertical strategies ramp and scale. With that, let me update you on a few strategic initiatives we are pursuing at Shift4, and a few exciting new merchant wins from the second quarter, as well as a little color as to where we are going. Tao Group, which owns many of the most recognizable restaurant and entertainment venues around the world, selected Shift4 as its end-to-end payment solution provider for all of its US-based venues. Tao selected Shift4, not only for our holistic solutions package, but also for our contactless and mobile payments technology, which was critical for their nightlife venues in this current environment. This win should really not be that surprising. As an integrated payments company that focuses on the most demanding environments in commerce, including hospitality and F&B, Shift4 is in an advantageous position for opportunities like Tao Group. What should be surprising is our notable wins in online, in-venue, and the overall regulated gaming market. We have stated our intentions to pursue this exciting vertical for some time, primarily leveraging our incumbency in many casinos around the country, as well as our mobile capabilities in sports stadiums. That noted, Shift4 should have been viewed as the underdog relative to other payment companies that had existing customer relationships and payment capabilities from the more mature European market. That stated we announced a preferred partnership with BetMGM to power their online gaming and sports betting transactions. Similarly, through our partnership with Sightline, Shift4 has a growing capability to facilitate regulated gaming transactions, both online and in-venue, such as our cashless casino payment experience that we expect to roll out at Resorts World Casino in Las Vegas. While we have not been issuing press releases each time a state approves Shift4 for a gaming license, know that we have been accumulating licenses at an accelerated pace. In addition to the significant accomplishments in gaming, stadiums, and hospitality, you will find other wins in our materials, including references to some e-commerce merchants that were the result of our acquisition and ongoing enhancement of the Shift4Shop platform. We continue to see growing adoption of the product, and since the acquisition, we've added over 36,000 new web stores. Now, with over 50,000 businesses on the platform as of June 30th, Shift4Shop has grown its merchant base over 230%. It's worth pointing out that it's a long road from web store creation to a merchant processing transactions. As such, we are evolving our Shift4Shop strategy to include, A, aggressively prioritizing new user experience, restaurant and hospitality-specific themes, with tight integrations to our POS platform. And I'm going to talk about that in just a minute, as well as our online ordering capabilities and other marketplace initiatives like capital offerings. And, B, simultaneously pursuing partnerships that will accelerate Shift4Shop's entry into new geographic markets, risk management tools, and capabilities like crypto acceptance that we have recently released. This two-prong approach in organic development initiatives, supported by strong strategic partnerships, will meaningfully accelerate our roadmap objectives and the overall momentum of Shift4Shop. I've spent a good amount of time talking about recent performance and accomplishments. Before turning things over to Taylor, I would like to take a bit of your time to talk about where we're going. Our organizational priorities are as follows. Number one, leveraging our 350 unique software integrations to pursue $150 billion of gateway volume, as well as the rest of the market that relies on these same integrations. This is without question playing to our immense strengths in verticals where it's very hard to replicate Shift4’s capabilities. As many of you know, the gateway conversion opportunity that is embedded in our business is probably the single biggest point of difference between Shift4 and virtually every other fintech player in the market. In order to achieve our objectives, we're going to continue to make investments in our products and capabilities to solve pain points for these customers, as further incentive to move to our end-to-end platforms. Some of these investments take the form of internal systems, customer self-help capabilities, automation, and other solutions to deliver a better experience for our merchants and the thousands of software partners that support them. Two, we’re about two quarters away from launching our next-generation restaurant platform. I say platform because this is more than just a new point-of-sale application. It's an entire experience-based platform for restaurants and their patrons. We are leveraging our immense expertise in the restaurant industry, along with feedback from roughly one-third share of the F&B market that our technology is presently touching today, to deliver a platform that will have a major emphasis on QR and other contactless means to pay, a tighter online ordering experience with our products, as well as third-party delivery providers, a modern low-cost and reliable architecture, business intelligence, analytics, and a marketing engine to drive loyalty and frequency from patrons, all wrapped up in a modern, mobile-optimized hardware. We're building an ecosystem around this platform to include payroll, capital offerings, and other solutions we think restaurant owners will find helpful. We expect to go to market with this solution in late Q1 2022, through our vast network of sophisticated and aligned distribution partners, capable of selling and supporting merchants at a local level. This will enable us to pursue an upgrade opportunity with our existing customers, driving incremental SaaS revenues and winning further share of what is an enormous and exciting market. Three, we’re a company that has created a lot of value over the years through a disciplined but aggressive approach to M&A when the right inorganic opportunities present themselves. Our momentum adding new merchants in adjacent verticals, such as stadiums and e-commerce, is proof we can successfully identify the right strategic assets to complement our business. We recently completed another convertible bond offering that significantly increased our cash position. We would not have gone down this road if we were not gaining some measure of confidence in our pipeline of opportunities. As we progress, our roadmap of opportunities is immense. The three priorities I referenced above really just scratch the surface. We're adding capability to our existing payment platforms that enable further scale and a right to win in new verticals and even taking us organically into new geographies. So, with that, let me turn this call over to Taylor Lauber to give you some additional color on our volumes through the summer, as well as some of our recent announcements in sports and entertainment.

Thanks, Jared, and good morning, everyone. We exited the very strong quarter with solid momentum, and remain optimistic that we are returning to a more normal seasonal cadence by the end of this calendar year. For example, July end-to-end payment volume was approximately $4.7 billion, as we continue to benefit from a larger base of merchants, and those merchants benefit from increased spending. This continued merchant growth is important to spend a moment on, because I think oftentimes our dominance in hospitality and restaurants can give the misperception that we are an economic recovery play from an investment standpoint. Note that we exited Q2 with roughly 7% more active merchants than in Q1, and this merchant growth of between 0.5% and 1% per week has continued through July. We would note that forecasting, specifically with regard to seasonality, is quite difficult when you consider the impact of merchant growth, new industry verticals, and increased spending as a result of economic recovery. Regardless, it's safe to say that though volume levels are improving, some pockets of our merchant base continue to be impacted by COVID. Barring any material new COVID imposed restrictions, we expect our third-quarter volumes to continue benefiting from seasonality and the momentum we have in our business, followed by a more typical seasonal moderation heading into the fourth quarter. As Jared noted, we continue to sign new stadiums within the sports and entertainment market, and we are excited to see a return to live sporting and entertainment events. Some of our stadium clients have already hosted live events. For instance, last month, Allegiant Stadium in Las Vegas, opened to a full capacity crowd attending an entirely cashless Garth Brooks concert. Also, as we mentioned in our release, Shift4 was selected by Chicago's United Center to power all payments throughout their venues, including integration with the Bulls, Blackhawks, and United Center mobile apps. In addition to our previous wins, these new merchants represent proof points that our value proposition to provide stadium clients with the best-in-class, in-venue mobile shopping experience for their fans, including everything from pre-game ticketing to in-seat ordering and scan-on-the-go merchandise. We remain active in the market evaluating M&A opportunities, and continue to view acquisitions as part of our growth strategy. The success we had with VenueNext and Shift4Shop, including our recent partnership with Sightline, has helped build upon our already strong reputation in the marketplace as a visionary partner.

Thanks, Taylor. Similar to the last quarter, the numbers I'll be referencing are included in the release we distributed this morning. I'll start with a few quick comments. First, we are very proud to mention that Q2 represents a record quarter for Shift4 across all of our key measures, including process volumes, merchant counts, revenue production, and profitability. Second, because of the impact of COVID on Q2 2020 results, I'm going to focus more on relevant comparables, such as sequential growth over Q1 and variances against Q2 of 2019, which represents our performance prior to COVID. As highlighted in our release, we generated $136 million of gross revenue less network fees in the quarter. This record figure represents a 40% increase compared to last quarter, and an 81% increase over Q2 of 2019 pre-COVID level. The continued growth in revenues over the first quarter was mostly due to a 54% increase in net processing revenues, driven by new merchant boardings and further recovery in consumer spending. Net processing revenue now makes up 68% of gross revenues less fees, up from 61% from the previous quarter, as we continue to monetize our services through adoption of our end-to-end solution. Gateway and SaaS other revenue streams both grew double digits from Q1, due to the recovery of the hospitality merchants on the gateway and continued growth in the merchant base. Q2 spread landed at 78 basis points, increasing three basis points from what we reported in the first quarter. The increase over last quarter is the net of the normal seasonal lift of three to five basis points we would expect, combined with a one to two basis points sequential quarter decline we have signaled, due to our continued shift toward larger end-to-end merchants. With regards to profitability, we reported a record $45 million in adjusted EBITDA for the second quarter. This represents a 65% increase over Q1 reported results when adjusted for the impact of the credit loss that we absorbed in the first quarter. It also represents a 67% increase over Q2 of 2019 pre-COVID levels when we normalized for consistent accounting treatment of equipment leases. As Jared mentioned, our second-quarter results represent an adjusted EBITDA margin of 33% against gross revenues less network fees. This represents 10 percentage points of margin expansion over Q1’s adjusted EBITDA margin or five percentage points when adjusted for the impact of the $5.2 million credit loss from Q1. Our margin trends continue to benefit from improved revenue generation and associated scale benefits within the cost structure. It should be noted that the recent acquisitions of 3dcart VenueNext negatively impacted Q2 margins by 240 basis points, as we continue to shift their pre-acquisition revenue streams to our spread-based monetization model and integrate these businesses into our operating structure. We reported our first quarter of positive GAAP net income since our IPO. And as a result, you will notice that we've included an additional section in the table on page 11 of our press release reflecting the dilutive effects of unvested restricted stock and the outstanding convertible notes. For purposes of calculating adjusted net income per share, we continue to use a more conservative non-GAAP diluted share count that includes Class B shares. As a result, for the second quarter, our adjusted net income per share of $0.22 is based on a non-GAAP weighted average diluted share count of 85.1 million shares. We did not execute on any significant capital transactions during the quarter. However, we issued just over $630 million of convertible debt in late July. With regard to liquidity, we ended the quarter with approximately $700 million in cash and approximately $100 million of available capacity on a revolving credit facility. Notable for the quarter is a cash outlay of approximately $120 million for employee tax withholdings and payroll taxes on 3.1 million shares of stock that vested on the one-year anniversary of our IPO. 80% of these shares were issued at the time of the IPO, with a one-year vesting period. So, this is not representative of typical cash outlays related to our equity-based compensation plan. Now on to updates for our annual guidance. To start, we are increasing our full-year volume guide by $2 billion, to a range of $46 billion to $48 billion, and increasing our full-year gross revenue guide by $200 million to a range of $1.3 billion to $1.4 billion. We are increasing our full-year growth revenue less network fee guidance by $20 million to a range of $500 million to $510 million. This increase is coming from the incremental processing revenue generated by the increase in volume. For EBITDA, we are increasing our annual guidance to land between $175 million and $180 million. The increase of $10 million over prior guidance is from an assumed 50% pass-through rate on the incremental processing revenue mentioned earlier. We use 50% versus the gross margin of 57%, due to continued investments in OpEx related to technology scaling efforts and additional staffing to support new verticals. Lastly, we would note that our new outlook ranges do not contemplate any potential economic slowdown or further lockdowns due to the COVID-19 Delta variant. As of now, we do not anticipate any significant negative impacts, but we'll update you all if needed. With that, let me turn the call over to the operator for your questions.

Hey, thanks, guys. Congrats on these results. When we look at the results, what is the driving force of what we saw what was a very - I think you said 7% new merchant growth sequentially. What does that translate to when you think about it on a year-over-year basis? And when we just try to break out the strong volume, even further acceleration in July, I think you said it was $4.7 billion, hitting more than the $1 billion per week. How much of that is reopening versus the new merchant growth you're seeing?

Hey, Darrin. Thanks for the question. This is Taylor. I think what’s great to see about the 7% sequential growth was that if you recall, we had 4% month-over-month growth in April over March, right? And so, that's a really important number to ground on because you still had reopening going on, especially within the hotel space, as spring break started to occur. So, seeing 7% on a consistent basis over the quarter really goes to show you that merchants have joined, right? And that's not a hotel that had closed and reopened for spring break for the first time. So, this 0.5% to 1% a week, it sort of bumps around a little bit in between those two ranges, is a consistent number that we've seen joining the platform, quite frankly, going back to even before the pandemic. And so, to see it continue, is I think, really a testament to the quality of the product offering. Now, the mix is augmenting slightly, but I think what's really important to understand is that the real new markets are not yet active contributors. So, you'd have, for example, a small handful of stadiums doing one venture, so in July, not at all, and yet when they show up in our July reported numbers next quarter, what you're going to see is a lot more volume per site out of them. And I think the July numbers shouldn't be a surprise, right, when you're adding merchants at this pace. The larger merchants, you should continue to grow. I think the one thing we just want to be mindful of is that in the fourth quarter, we typically see a seasonal slowdown across all of our merchant base. So, we want to be cautious that $4.7 billion is a number we're exceptionally proud of, and you do want to be mindful in the fourth quarter that you see typically a slowdown within your existing base, but we're not seeing a slowdown in merchant adds.

Yes. Hey, Darrin, this is Brad. I'll take that. And you're exactly right. I mean, the 50 number we talked about last time is certainly a floor. What we're seeing is certainly a mix across the board, across the spectrum of merchants. So, while we are adding some of these large merchants in those 50 ranges, we are certainly adding - we continue to add restaurants. We continue to add specialty retail merchants in the 80 to 100 basis point range. So, it's going back down to a book rate.

Thank you. Good morning. You've clearly underscored the strength of your liquidity and a number of opportunities in the acquisition pipeline. Could you talk through your focus in terms of acquisition? Would this be in terms of that new horizontal capability like a 3dcart, or going more deeper into existing or new verticals like a VenueNext?

Yes. Thanks, David. Good morning. Jared Isaacman here. So, good question. I'd say the story really unchanged. We've continued to say that we have a pretty healthy pipeline that Taylor's team has been developing that really goes in a number of directions, right? Like on one end of the spectrum, you have the big transformational-type acquisitions we're looking for all 2017 when we acquired Shift4 and began our gateway strategy. In which case, we could be talking about moving into new geographic markets, extending our reach there. We could be talking about an exciting new vertical that kind of shares some of the characteristics that we've found very helpful within our current core markets, like multiple different types of software to deliver a commerce experience. That's where we typically would want to focus. And then you kind of flip to the other end of the spectrum, where you're talking about smaller transactions consistent with some of our last deals like VenueNext, like 3dcart, which is now Shift4Shop, in which case, you could be talking about entering into new verticals. You can be talking about accelerants within our existing verticals. For example, we did an acquisition almost a year ago, maybe a little less than that, which was Micros Retail Systems. It was a pro service company, and it helped pull forward a lot of our growth within our current markets, as well as accelerate some of our gateway conversions as well. So I'd say those are really all on the table and nothing really has changed as much, other than you may have noticed in some of my remarks, that even things like moving into new geographic markets, which probably we would have said on other earnings calls would have been favored more in terms of like an inorganic initiative. We wound up just allocating some of our dollars towards that. And we're already right now doing some things in the Caribbean. We’re already looking to develop that further for - and acquire - to add additional acquiring-type capabilities. And that was an entirely organic initiative. So, even though we have some wish list items and we certainly have a lot of firepower to deploy against them, we're not slowing down on the organic side.

No. Hey, good question. So, no. The - when you look at the back half, we still do not have any assumed additional acquisitions targeted for Q3 and Q4 embedded in that guide, nor do we have significant stadium volume. Taylor mentioned, what’s coming through now is measured in hundreds of thousands of dollars. So no, we do not have a significant ramp at all coming in from the stadium vertical.

Just to clarify, David, we do obviously have the expense base, right? And this has been a theme we want to make sure is crystal clear. So, we have the fullest annualized impact to the expense base of VenueNext and Shift4Shop, and then the Micros business that Jared mentioned. So the OpEx does reflect sort of the incremental increase.

Thank you. Hi, Jared, Hi, Taylor, and Brad. Good morning, and congratulations on the quarter. I wanted to ask with regards to the outlook, what's embedded, sort of what gets you to the high end versus the low end? And you mentioned cadence, I think in one of the responses here for Q growth being a little lighter. Obviously, when we look at the past, both 2019 and ’20, it's a little difficult to figure out what true seasonality is. If you could comment on how you're thinking of that with respect to your outlook.

Yes, sure. I'll start. I think it's important to note that we continue to be conservative in our volume guide. I mean, this is always evidenced hopefully by the fact that when we're guiding, annualizing recent trends gets you beyond those guidance. So, there's not a lot of science in the range, except that we think it's prudent to give a range. And then there's the cautionary statement, which is, we see much more normal seasonal patterns this year. I mean, we’ve talked about depressed payment volume leading up to the middle of February, and then a strong increase in March, and then a strong increase again in June, sustained through the summer. And we would expect to the extent that the first sort of half of the year, first seven months of the year, have been - have expressed normal seasonal patterns, that the fourth quarter looks seasonally normal as well, meaning that payment volume per site declines during that quarter. I think the ballast to that, right, is our strong merchant growth. The ballast to that are things like floor sports events and stadiums that we don't include in our guide because it's a bit unknown. So, I think the methodology on our guide hasn't really changed much from what we've done in the past, which is point to the most recent evidence and add some conservatism for the months ahead, given what we've seen in the merchant base. And to the extent that our offering continues to outperform and merchants join at the strong pace, then we hope we'll do better than what the guide suggests.

Yes. I'll take this one, only because I'm probably responsible for the very unclear statement in our prepared remarks on it because it's hard math to do. I think you have to look at pockets of the merchant base and analyze them on a case-by-case basis. I would say restaurants in general from a payment volume perspective are looking reasonably good. You'd see this in things like the Visa and MasterCard or the American Express category stack data. However, the way it manifests itself is higher prices as opposed to floor occupancy in most parts of the country. So, there is higher prices per merchant. Average ticket volumes have gone up in a bunch of different places across our book. So, it's hard to pin down precisely a recovery of occupancy versus a recovery of ticket prices or ticket prices, quite frankly, going beyond where they would have been pre-pandemic. I would say the hotel space still at a macro level is depressed, although at a more regionalized level, hotels are seeing really good tourism behavior, ex-international, right? So, we're seeing pockets where volume in certain cases is above where it would have been pre-pandemic. In other cases, it's still substantially below when you think about international-heavy markets and towards the heavy markets. So, it's why we sort of keep pointing people towards the merchant account growth because if anything, in a world where you've seen a pandemic impact our end markets really, really significantly, the idea that we can point to between 0.5% and 1% active merchant account growth every week throughout that timeframe, that's what we like to rely on in terms of predictability, whether it's sustained higher average ticket values continue, whether occupancy grows, these are all things that quite frankly, it's too hard to predict.

Great. Thanks a lot. Thanks for taking my question. I want to dig into the next-gen restaurant platform that is coming in a few quarters, and just talk about that opportunity there. It seems like a great new tool to give to the bars that would be attractive to them in terms of how they allocate their time in selling and recognizing that they have options. And then also when we think about it as a way to attract new SMB restaurants, but also, is there an opportunity for an upgrade within your existing base that might either be take-rate supportive or take-rate accretive in some manner?

Yes. Hey, Tim. Good morning. Jared Isaacman here, and great question. The answer is really yes all around. So, it's certainly an opportunity to empower our men's distribution network to simply just go out, differentiate and win in what is a huge market. So, we touch a third of the restaurant market today but not - but we don't have the end-to-end processing on a third of the restaurant or F&B market today. So they're using some form of payment technology, which is a foot in the door and an opportunity to have a conversation, opportunity to convert gateway volumes end in, but there's still the other two thirds in the market out there, which is pretty exciting. So, it's an opportunity for us to go out and win share in the market. It's an opportunity to upgrade existing merchants that are within our immense base of customers today. And in doing so, that’s certainly going to create incremental opportunities from like a SaaS revenue perspective. It's an opportunity to drive gateway to end-to-end volume conversions. And then it's an opportunity as well, to just tap into a lot of revenue opportunities in the broader payment application ecosystem. We've talked about in the past, right, that if you look at the size of our customers and certainly the direction we're going, should - does Shift4 have an opportunity to really get involved in payroll and potentially monetize relationships through a customer that way, through other HR services, or capital offerings? As we look to this new restaurant platform that we intend to roll out pretty soon, and it's already in beta right now. It's actually beyond beta. I would say it's hitting a pretty substantial number of customers. It is an opportunity for us to dive into that broader ecosystem. And other things I'd say too is, if you look at some of the applications that will be, I don't know, kind of spearheading what we're describing as this customer, patron-first approach, like QR code-based payments and what we've been doing with SkyTab, you're accumulating a lot of information on consumers that would - and when I say that, meaning like email addresses for various marketing and loyalty-based application. It gives - it puts Shift4 in an interesting spot where we can start looking at things that otherwise wouldn't have been available to us, not totally going like claim two sides like maybe some of the other organizations, but certainly an opportunity to get a little bit closer to it than we have been in the past, if that makes sense.

Hi, good morning, guys. Nice quarter all around, and congrats again on the one-year anniversary here since the IPO. My question is on the revised outlook for 2021. So, if I take a look at the mid-points you provided for net revenue and end-to-end volumes relative to the prior outlook, I'm coming up with incremental spreads of 1% by taking the $20 million in incremental revenue divided by the $2 billion of incremental volumes for the year. So, I guess, what factors are driving your spread assumptions higher compared to the prior outlook?

Yes. Hey, Mike. This is Brad. So, I'll start off with saying, one of the things we learned was the conservatives spread outlook last quarter, we probably undershot when we talked about the 50 basis point add. So, when we approached it this quarter and we raised guidance, we wanted to make sure we were more reflective kind of on the spread side. So, when you think about how that $2 billion is going to convert $200 million, the majority of that is certainly coming through processing revenue. We call it in that 80 basis point range, right? It's going to blend down, like I mentioned, with bearing a while ago, you’ve got new stuff coming on at a floor of call it 50 basis points. You've got numbers of merchants still coming on in 100 to 80 basis point range. So, it's going to blend down to more of an 80 basis point range. You also do have some lift in the guide related to some of the non-processing revenues. You've got some slight lift in the gateways that recovered a little bit quicker than we thought, and some slight lift in the SaaS revenue. So, if you think of the $20 million, the vast majority of it is processing, but there are some other components that are non-spread related.

Thanks very much, and good morning, everybody. I wanted to touch on a couple of little bit of details, is that, first, obviously the rate at which you're adding new customers is really impressive. I'm wondering if you can give us a little bit of color of where those are coming from. Are these new customers - like new businesses? Are they coming from other providers, and just kind of wondering where you're taking those new customers from?

Hey, James, thanks very much. Good question. Jared Isaacman here on this one. This comes back to really just a foundational component to the Shift4 story, which is, on the more complex end of the commerce spectrum, where we play, there's really only two other platforms that have the software integration that are capable of really competing with us. It's so important understanding that, right, because the payments landscape is huge. Probably everybody thinks that everybody has some right to win, especially as you kind of move up into that more upmarket end of the spectrum, but it's really just not the case, right? In a world of integrated payments where you're connecting software to a payment platform, especially multiple different types of software, we're talking about like specialty retailers or ski resorts or big hospitality resorts, or complex restaurants, like Tao Group, for example, that we referenced in our prepared remarks. There's only three platforms that have those software integrations that would be able to compete for that business. And that's really the case on the whole upper end and more complex end of that commerce spectrum, and Shift4 is one of them. Now, we've said for a while, we own more links in the value chain than any other payment provider. So, what does that mean? We just have more tools available to us to differentiate when we're already afforded a seat at the table. So, things like QR code-based payments, and contactless payments, and mobile payments, and online ordering. We own all of these capabilities already. So, we just have so many different levers to pull, so many incentives and carrots as inducement to make available to these customers to move over to our end-to-end platforms. It’s a very powerful value proposition because it really comes down to taking out a lot of complexity, which means taking out a lot of cost, which was important to our customers in like the best of economic times before the pandemic. It was obviously very relevant to them through the pandemic because we were adding a lot of customers and actually growing volume during such a challenging time period. And that's what we just continue to do as part of our ongoing strategy, recognizing we're in such an advantageous position. We look for capabilities to further differentiate. We look to take the strengths that we have in this complex end of the market and bring it into other comparable verticals, like sports entertainment and theme parks, and do exactly the same thing right now. So really, we're in a competitive landscape with you, and we're able to differentiate in a very effective way, and that's why we're growing customer count, and which is contributing volume. Yes. And my apologies if I didn't add an approximately in there. I don't think we're significantly off. I think that approximately $150 billion of gateway volume to go is probably pretty accurate because even though, as Taylor mentioned, that was the number we cited in the end of quarter one, and we of course had a fair amount of conversions, the actual pace of conversions from gateway customers to end-to-end has been unchanged for several years now. You also would have had somewhat of a recovery from within the gateway base anyway. So you're probably in that same ballpark. But in terms of pace of conversion, it's very consistent, I mean very consistent that we win approximately 50% of our new customers via just winning share of the market connected to any number of our integrations, and the other 50% is customers that are on our gateway that migrate over. Yes. So there's certainly a lot of opportunity that remains within the existing base of gateway customers. I don't think our positioning has changed at all in terms of what we think is addressable, which is all of it. It's just a healthy base that we're pursuing with our thousands of really aligned software partners. So just to be clear, like it's not just valuation, right? It's also the quality of the asset itself. So when I think back to 2017, when we acquired our first gateway, which was Shift4 gateway, I mean, that was like a record multiple for us. I mean, it was probably 24, 25 times forward EBITDA on a fully - even on like a year one synergized basis, it averaged pretty quickly. But we were prepared to pay up for what would probably been considered toxic valuations at that time period. I don't actually think anything's changed in terms of 2021 or 2020 in terms of the valuation we're willing to pay for a quality asset. I just don't think a lot of the deals, of course, you probably would have seen, some of them would have been announced from others who wound up pursuing them, where that high quality, where we felt like we could leverage a playbook that's worked incredibly well for us to just unlock an integrated payments opportunity. So yes, I mean, valuation is certainly part of it, but we want good quality assets. And I don't think there's been too many out there that got us super excited. Yes. So, the answer is you just - we're just balancing both. If something gets us really excited and we think we can create a lot of value with it, we're certainly happy to allocate dollars in that direction. It's not, we're able to achieve an awful lot of like really powerful things in terms of our organic investments.

Hey, good morning guys. Jared, I just wanted to touch on a comment I think you made, and I wanted to clarify in the prepared remarks, the gateway volume was not about $150 billion. I think if we go back a year at the IPO, it was 185. So, just curious how much of that has been converted, and if you don't have an explicit number, just maybe an update on gateway conversions.

Yes. Let me just clarify, and then Jared can talk about the conversion phase. We just pulled - we just referenced the stat on our last earnings call. So that was a March annualized number of $150 billion of gateway volume. We haven't refreshed that for the second quarter earnings.

Yes. And my apologies if I didn't add an approximately in there. I don't think we're significantly off. I think that approximately $150 billion of gateway volume to go is probably pretty accurate because even though, as Taylor mentioned, that was the number we cited in the end of quarter one, and we of course had a fair amount of conversions, the actual pace of conversions from gateway customers to end-to-end has been unchanged for several years now. You also would have had somewhat of a recovery from within the gateway base anyway. So you're probably in that same ballpark. But in terms of pace of conversion, it's very consistent, I mean very consistent that we win approximately 50% of our new customers via just winning share of the market connected to any number of our integrations, and the other 50% is customers that are on our gateway that migrate over. Yes. So there's certainly a lot of opportunity that remains within the existing base of gateway customers. I don't think our positioning has changed at all in terms of what we think is addressable, which is all of it. It's just a healthy base that we're pursuing with our thousands of really aligned software partners.

Good morning. Thanks for taking my question. Wanted to ask about the new restaurant platform, and partly about the timing of it now, of why working on it now. Is it sort of pandemic-related or is it just a need to refresh a bunch of technologies? And then thinking about it from the restaurant perspective, what is like typical lifecycle for a platform from a restaurant? Like how often do they typically revisit what they do? Or I imagine there's a lot of variation there, but I'm wondering if there's a general rule of thumb of when you might get an opportunity to revisit with restaurants.

Yes. Thanks, Chris. Jared here. So this new platform, which is internally codenamed, Edgewater, existed prior to the pandemic. We did think it was pretty prudent during the pandemic, especially considering how impacted our end markets were, to reprioritize development resources to adding capabilities to existing solutions. First, it just - I mean, it just wasn't like an environment conducive to people coming onsite and ripping out hardware and software and reinstalling new ones. Like nobody even wanted to visit face-to-face. So, as it became clear that we were emerging from the storm, if you will, we just put the resources back on the project that we've been excited about for several years, which is Edgewater. And what is Edgewater designed to do? It's designed to take all the different capabilities that we think are essential for an SMB-type restaurant environment and deeply integrate into a single application. So instead of paying third parties for gift and loyalty and online ordering, of which there's like 100 companies out there doing that, plus point-of-sale, plus analytics, plus marketing, and combining it all into a single ground-up application, Android-based, hybrid cloud, everything customers would want, we've been excited about that idea for a long time. Now we do have, I would say measured in the hundreds out there in beta, which has been deployed slowly through our existing distribution channels. And as we continue to gain confidence, and add more capabilities, we think it will be a pretty big hit for existing customers and new ones. Now, in terms of timing for customers, I'd say, like, if we look at the like upmarket towards the more enterprise customers, regional chains, not uncommon for them to be seeking bids in a three to five-year type interval, whether it's like a formal RFP or just soliciting interest. I'd say SMBs, like until they have a problem, they're going to continue to roll with what they’ve got. That's pretty much the general trend. We've certainly seen restaurants in the smaller end of the spectrum, throw out a solution inside of like months or a year if it wasn't solving the pain point that they felt was most relevant for the business. We've also seen plenty of stuff out there that's been around for quite some time. What I would say with high confidence is the overwhelming vast majority of the restaurant industry is using Windows-based point-of-sale applications. And Windows comes with a lot of headaches, right? It's just a lot of upkeep, and it's pretty draining on hardware. And every time there’s a Windows update or something, things start breaking. So, the market that's going to be ripe for like a very sexy new platform, following along with our existing strategy of, don't charge for 100 different annoying things and just monetize the relationship through payments, we think is pretty large and ripe for the - and well-timed for our solutions.

Hey, good morning. I appreciate you squeezing me in. Lots of good stuff discussed already. Jared, I wonder, can you update us on your thinking around the gateway strategy broadly? And I guess what I'm asking is, is there any thoughts that you could move directly to offering end-to-end processing solutions as in addition to the conversions within the existing gateway as a means of accelerating growth? And I guess, what would be required, and are you investing against that kind of opportunity today?

So, I want to make sure I understand the question because we've been pretty consistent that about 50% of our production in any given month comes from just winning share of the addressable market. They’re going right to the end-to-end platform, leveraging the software integrations we already have. So, only about ...

Our next question comes from David Togut of Evercore ISI. David, please proceed. Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your lines.